EXERCISE 6-5 Applying the High-Low Method; Predicting Cost [LO2-CC7, 9] Hoi Chong Transport, Ltd. operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 114,800 kilometres during a year, the average operating cost is 12.5 cents per kilometre. If a truck is driven only 70,000 kilometres during a year. the average operating cost increases to 14.5 cents per kilometre. (The Singapore dollar is the currency used in Singapore.) Note: In your computations, please do not round the decimal places of cost per kilometre. Required: 1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. 2. Express the variable and fixed costs in the form Y-a-bX 3. If a truck were driven 80.000 kilometres during a year, what total cost would you expect to be incurred? Page 260 C